EXHIBIT 10
STATE OF NORTH CAROLINA
COUNTY OF XXXXXXX
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT is made and entered into this 29th day of
December, 1995, by and between WELLCO ENTERPRISES, INC., a North Carolina
corporation with its principal office and place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, and hereinafter referred to as the
"Company"; and XXXXX Xx. XXXXX, hereinafter referred to individually as "Xxxxx";
and the undersigned corporate signators to this Agreement, hereinafter referred
to collectively as "The Coronet Group".
W I T N E S S E T H :
WHEREAS, The Coronet Group are stockholders of the Company and as of the
date of this Agreement collectively beneficially own a total of 535,424 shares
of the Company's presently outstanding 884,806 shares of common stock; and
WHEREAS, the Company is authorized to repurchase said shares held by The
Coronet Group pursuant to the provisions of N.C.G.S. Section 55-6-31(a); and
WHEREAS, the Company has received from Interstate/Xxxxxxx Xxxx, Inc., of
Charlotte, North Carolina an opinion that the entering into of this transaction
is fair from a financial point of view to the common shareholders of the
Company, and has given notification of this transaction to the American Stock
Exchange as required by the rules and regulations of said Exchange; and
WHEREAS, the Board of Directors of Company has determined that the
repurchase of 510,424 shares of the Company's stock from The Coronet Group in
accordance with the terms of this Agreement is in the best interest of the
Company and its common shareholders; and
WHEREAS, The Coronet Group are willing to sell said 510,424 shares of the
Company's stock in accordance with the terms of this Agreement;
WHEREAS, the corporate signators to this Agreement from The Xxxxx Group are
as follows: (I) WELLCO HOLDINGS COMPANY, a Illinois corporation, which
beneficially owns the Company's stock which is the subject of this Agreement;
(ii) RDIS Corporation, a Delaware corporation, of which Xxxxx owns more
than 50% of its outstanding stock and itself is the parent corporation of
SUNSTATES CORPORATION;
(iii) SUNSTATES CORPORATION, a Delaware corporation, which is the parent
corporation of NORMANDY INSURANCE AGENCY, INC., an Illinois insurance
corporation;
(iv) NORMANDY INSURANCE AGENCY, INC., a Illinois corporation, which is the
parent corporation of CORONET INSURANCE COMPANY, an Illinois corporation;
(v) CORONET INSURANCE COMPANY, an Illinois insurance corporation, which is
the parent corporation of WELLCO HOLDINGS COMPANY, an Illinois corporation;
(vi) TELCO CAPITAL CORPORATION, a Delaware corporation, which owns a
majority of the equity interest in HICKORY FURNITURE COMPANY, a Delaware
corporation; and
Page 5 of 11 Pages
(vii) HICKORY FURNITURE COMPANY, a Delaware corporation, which owns a
majority of the equity interest in WISCONSIN REAL ESTATE INVESTMENT TRUST, a
Wisconsin business trust;
Attached hereto as Exhibit "A" are the respective direct beneficial owners
of the Company's stock which is the subject of this Agreement and which will
receive the payments to be made by the Company under this Agreement. By signing
of this Agreement, each of these named owners agree that all the consideration
paid by the Company will be to LaSalle National Bank as payment to each of them;
NOW THEREFORE, the Company and The Coronet Group (by their respective
corporate signatures hereinafter affixed enter into this Agreement) and subject
to the following terms and conditions, hereby agree as follows:
1. The Company hereby repurchases from The Coronet Group and The Coronet
Group hereby sells to the Company, FIVE HUNDRED TEN THOUSAND FOUR HUNDRED AND
TWENTY FOUR (510,424) shares of the Company's stock currently owned by The
Coronet Group at a purchase price of $10,346,753.00 ($20.2709 per share),
payment to be made by a cash payment of $5,460,205.00 and transfer by Company of
the Company's 400,000 shares of the outstanding common stock of Alba-Waldensian,
Inc., a Delaware corporation, at an agreed upon price of $4,886,548.00
(consisting of the Company's initial cash cost of $4,250,000, the cost of
acquisition of $224,786, a return on this investment of $357,983, and the
cumulative accounting loss recorded by the Company of its equity share of the
losses of Alba through September 30, 1995 of $53,779), to the respective owners
of the Company's stock purchased hereunder as reflected on Exhibit "A" hereto.
Payment of the above cash, transfer of the 400,000 shares of the common stock of
Alba Waldensian, Inc. and transfer of the 510,424 shares of the Company's stock
will be made simultaneously and on December 29, 1995 or the earliest possible
date thereafter.
2. In addition to the cash purchase price for said 510,424 shares provided
for in Paragraph 1 above, the Company shall further be obligated to pay the
respective owners of stock owned by The Coronet Group and sold to the Company
hereunder, or their respective heirs, successors or assigns, an additional
amount not to exceed $1,531,272.00 but payable only from sixty (60%) percent of
the cumulative after-tax profits of the Company as determined by the annual
audited consolidated financial statements of the Company in excess of
$400,000.00 for each of the six (6) fiscal years of the Company commencing with
the fiscal year starting June 30, 1996. Such payment shall be made by the
Company within ten (10) days after the receipt by the Company of its audited
financial statement for its fiscal year ending June 28, 1997, and the subsequent
five (5) fiscal years, until the selling shareholders have collectively been
paid a maximum total of $1,531,272.00. Said audited financial statement shall be
furnished to the Company by the Company's then-regularly engaged independent
auditors. The Company shall have the right at any time to prepay the principal
of any unpaid balance of the maximum $1,531,272.00, in whole or in part, at its
discounted present Value applying a SEVEN (7.0%) PERCENT discount factor per
annum from its execution date to the prepayment date and assuming a total payout
period of six (6) years from June 30, 1996. Said obligation shall be unsecured
and subordinate to all financial obligations of the Company for money borrowed,
whether now or hereafter secured or unsecured and no payments on said obligation
may be made if there then exists any default in the terms of any such secured or
unsecured financial obligations of the Company and said obligation shall be
subordinate to such other secured or unsecured financial obligations. The
Company will expeditiously prepare a Contingent Note containing the above
provisions.
3. The Coronet Group hereby warrant, acknowledge and represent to the
Company that the report of beneficial ownership of the Company's stock held by
The Coronet Group as reported in SEC Form 4 for the month of November, 1995
attached hereto as Exhibit "B" and filed with the United States Securities and
Exchange Commission and the Company, is and remains true and correct and that
the identity and respective stock holdings of the Company's stock of the Coronet
Insurance Company subsidiaries not named in Exhibit "B" are as stated in Exhibit
"A" hereto.
Page 6 of 11 Pages
4. The Coronet Group hereby warrants and represents to the Company that The
Coronet Group is acquiring said shares of Alba Waldensian, Inc. for its own
account, for the purpose of investment only and not for the purpose of or with a
view to the sale or other disposition thereof within the meaning of the
Securities Act of 1933, as amended (the "Act"), except as may be permitted by
such Act and the rules and regulations promulgated under such Act. The Coronet
Group acknowledges that said shares are not registered with the SEC or with any
regulatory agencies charged with the administration of state securities laws.
The Coronet Group acknowledges that a legend to such effect will be placed on
certificates representing the shares. As a condition to said purchase and sale
transaction, the Company hereby relinquishes and transfers to The Coronet Group
all rights and obligations of the Company and The Coronet Group hereby
relinquishes and transfers to the Company all rights and obligations of The
Coronet Group arising under December 29, 1994 Stock Purchase Agreement between
the Company and Coronet Insurance Company relating to said 400,000 shares of
Alba-Waldensian, Inc. stock which were subject of said Stock Purchase Agreement.
Accordingly, upon transfer of said Alba-Waldensian shares said Stock Purchase
Agreement shall become null and void and no longer of any force and effect by or
against the Company and The Coronet Group.
5. The Coronet Group hereby irrevocably agree that neither they nor any
person, firm or corporation with which they are associated (as defined by
applicable rules and regulations of the United States Securities and Exchange
Commission) will acquire direct or indirect beneficial ownership of any of the
Company's common stock exceeding 20% of the common stock outstanding at any time
for a period of ten (10) years after the consummation of this Agreement. The
Coronet Group hereby irrevocably designate the Board of Directors of the Company
as their attorney-in-fact and proxy for this ten (10) year period after
consummation of this purchase transaction as to the voting rights attendant to
all shares of the Company's stock now or hereafter owned by The Coronet Group at
any annual or special meeting of the Company's stockholders as to any and all
matters which may properly come before the Company's stockholders for vote at
all of said meetings.
6. Xxxxx Xx. Xxxxx further hereby irrevocably agrees to resign as a
Director of the Company effective with said consummation of this repurchase
transaction as above provided.
7. The Coronet Group hereby undertake to timely file with the Securities
and Exchange Commission all filings required by them as the result of
consummation of this Agreement and particularly SEC Form 4 and Form 13-D.
8. The Coronet Group warrants and represents to the Company that each of
the corporate members of The Xxxxx Group which are signators to this Agreement
and the individual signators signing on their respective behalves have full
corporate, statutory and regulatory authority to execute and consummate this
Agreement and that the Company's stock to be sold to the Company pursuant to
this Agreement will be at closing hereunder free of any liens or contractual
obligations of them or any of them that would preclude or in any manner restrict
or limit the sale of the Company's stock pursuant to this Agreement.
9. Attached hereto as Exhibit "C" is a schedule of all the Company's stock
acquired by The Coronet Group acquired by them after June 30, 1995 and the
respective purchase price for said stock so acquired. The Coronet Group hereby
acknowledge that they are respectively liable to the Company for any profit
realized by them based upon the selling price of $20.2709 per share provided for
under Paragraph 1 of this Agreement and the purchase price for said stock as
reported on said Exhibit "C". The Coronet Group as reported on said Exhibit "C"
shall pay to the Company upon the Company's purchase of the stock hereby
repurchased by the Company the profit realized pursuant to Section 16(d) of the
Securities Exchange Act of 1934, on or before January 31, 1996.
Page 7 of 11 Pages
10. This Agreement shall be interpreted under applicable laws of the State
of North Carolina and the United States of America. All notices to be given
hereunder shall be mailed (with facsimile copies thereof) as follows:
To The Coronet Group: To the Company:
c/o Sunstates Corporation Xx. Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xx. Chairman, Board of Directors
Xxxxxxx, XX 00000 Wellco Enterprises, Inc.
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxxx, XX 00000
Fax No: 000-000-0000 Fax No: (000) 000-0000
Page 8 of 11 Pages
This Agreement has been executed and entered into by the Chairman of the
Board of the Company upon authorization duly given to them by the Board of
Directors of the Company at a Special Meeting thereof held on December 29, 1995,
and by the undersigned corporate members of The Coronet Group.
BY AUTHORIZED OFFICER SIGNATURE
WELLCO ENTERPRISES, INC. Chairman of the Board of
Directors
THE CORONET GROUP:
WELLCO HOLDINGS
COMPANY
NATIONAL ASSURANCE
INDEMNITY COMPANY
CORONET INSURANCE
COMPANY
NORMANDY INSURANCE
AGENCY
SUNSTATES CORPORATION
WISCONSIN REAL ESTATE
INVESTMENT FUND
HICKORY FURNITURE
COMPANY
TELCO CAPITAL
CORPORATION
RDIS CORPORATION
XXXXX XX. XXXXX,
individually and as a Director
of the Company
Page 9 of 11 Pages
EXHIBIT A
STOCK REPURCHASE AGREEMENT ENTERED INTO ON DECEMBER 29, 1995
BETWEEN WELLCO ENTERPRISES, INC. AND THE CORONET GROUP
DIRECT BENEFICIAL OWNERS OF THE COMPANY'S STOCK SUBJECT TO THIS AGREEMENT
Wellco Holdings Company
National Assurance Indemnity Company
Coronet Insurance Company
Normandy Insurance Agency
Sunstates Corporation
Wisconsin Real Estate Investment Fund
Hickory Furniture Company
Telco Capital Corporation
RDIS Corporation
Xxxxx Xx. Xxxxx
Page 10 of 11 Pages
EXHIBIT B
STOCK REPURCHASE AGREEMENT ENTERED INTO ON DECEMBER 29, 1995
BETWEEN WELLCO ENTERPRISES, INC. AND THE CORONET GROUP
SECURITIES AND EXCHANGE COMMISSION FORM 4 OF THE CORONET GROUP FOR NOVEMBER,
1995
The attached eight pages are a true and exact copy of the Securities and
Exchange Commission Form 4 for The Coronet Group.
Page 11 of 11 Pages
